Deposit rates continue to grow in October-November

The October to November 2018 saw continued growth in deposit rates, while lending rates moved closer to stabilisation, according to the 33rd issue of ‘Banking Sector Liquidity and Financial Markets’, a Bank of Russia commentary.

FX liquidity continued to post a favourable performance, driven by a massive inflow in the current account of the balance of payments, against the backdrop of suspended fiscal rule-based foreign currency purchases. Growing tax revenue in the context of moderate budget expenditure and the Bank of Russia’s move to suspend its foreign currency purchases in the domestic market sent the structural liquidity surplus lower.

In November, the drop in global oil prices alongside rising geopolitical tensions dragged down prices across most segments of the Russian financial market. Having said that, the drop was less sizeable than expected, given the above impactful developments.

December is when Russian companies start to make its intermediate dividend payments, which are set to have an intangible impact on the ruble exchange rate.